Discount Accounting
Discounts help reduce the selling price of products or services on an invoice. Frappe Books allows you to apply item-wise discounts using either a percentage or a fixed amount while maintaining accurate accounting records.
This guide explains how to enable Discount Accounting, configure the discount account, apply discounts to invoice items, and calculate discounts before or after tax.
Tip
Once Discount Accounting is enabled, discounts are recorded automatically against the configured Discount Account whenever invoices are submitted.
Enable Discount Accounting
Before applying accounting entries for discounts, Discount Accounting must be enabled in General Settings.
Navigate to:
Setup → Settings → General
- Enable the Discount Accounting option.
- Select the account that will be used to record discounts.
- Save the settings.
Important
After Discount Accounting has been enabled, it cannot be disabled.
Configure the Discount Account
After enabling Discount Accounting, select the account where discount amounts should be recorded.
- Create an Indirect Income account if one does not already exist.
- Select this account in the Discount Account setting.
- All invoice discounts will be posted to this account automatically.
Apply Discounts to Invoice Items
Discounts are configured individually for each invoice item.
- Open a Sales or Purchase Invoice.
- Click the Edit button beside the required item.
- Choose how you want to apply the discount.
Frappe Books supports two discount methods:
| Method | Description |
|---|---|
| Discount Percentage | Applies a percentage reduction to the item price. |
| Discount Amount | Applies a fixed monetary deduction to the item. |
Note
You can also enter the final discounted amount directly. Frappe Books automatically calculates the corresponding item rate or discount value.
Discount Before or After Tax
By default, discounts are applied before tax calculations. If your business requires tax to be calculated first, you can apply the discount after tax.
- Open the invoice.
- Expand the invoice Settings.
- Enable the Discount After Tax option.
- Save the invoice.
| Option | Result |
|---|---|
| Discount Before Tax | Tax is calculated after reducing the item value. |
| Discount After Tax | Tax is calculated on the original amount before applying the discount. |
Discount Workflow
- Enable Discount Accounting.
- Configure the Discount Account.
- Create or edit an invoice.
- Edit an invoice item.
- Enter a Discount Percentage or Discount Amount.
- Choose whether the discount is applied before or after tax.
- Save and submit the invoice.
Best Practices
- Create a dedicated Indirect Income account for discounts.
- Decide whether discounts should be applied before or after tax based on your tax regulations.
- Use percentage discounts for promotional pricing and fixed amounts for negotiated reductions.
- Review invoice totals before submitting to ensure discounts are applied correctly.
- Remember that Discount Accounting cannot be disabled once it has been enabled.
